http://www.judis.nic.in The petitioner in this Original Petition was the respondent in the proceedings for arbitration between the parties that culminated in an award dated 02.05.2014 challenged now in terms of Section 34 of the Arbitration and Conciliation Act 1996 (in short 'Act').
2. The brief facts are as follows: The petitioner is engaged in the business of manufacturing of tiles and entered into a clearing and forwarding agency agreement dated 1.4.2008 for a period of three (3) years with the respondent herein. The agreement provided that it was the responsibility of the respondent to hire a warehouse in New Delhi for the purpose of stocking of the petitioners' goods upon reimbursement by it of expenditure incurred in this regard by the respondent. A sum of Rs.25,00,000/- was remitted by the respondent as a security deposit to the petitioner. The aforesaid amount bore interest at the rate of 10% per annum payable quarterly within one month of due date.
3. During the tenure of the Agreement, various disputes arose inter se the parties that were sought to be referred to arbitration in terms of the clause provided in the agreement. This Court appointed a sole arbitrator vide order dated 19.04.2013 in O.P.N.372 of 2012. The claimant in arbitration, viz., the respondent herein, claimed various reliefs including the refund of the security deposit of Rs.25,00,000/-, Rs.14,25,167/- towards expenses incurred, damages for breach of agreement and the resultant loss estimated at Rs.5,00,000/- and a direction for the sale of the goods lying at the godown in http://www.ju'daiss.niicn.in where is' condition and appropriation of the amounts, if any, recovered towards the dues from the petitioner herein. In this regard, a valuation report was filed by the petitioner to the effect that the goods were of the value of Rs.45,40,387.27/-.
4. In the light of the rival claims raised, the following issues were framed for resolution by the Learned Arbitrator:
http://www.judis.nic.in '1. Whether the claimant is entitled for the rent in respect of warehouse, if so till what date?
2. Whether the claimant is a dealer under the Respondent as claimed by the Respondent?
3. Whether the claimant has transferred and sold the good without the permission of the Respondent?
4. Whether the claimant refused to handover or deliver the goods to the representatives of the respondent?
5. Whether the respondent is entitled to the value of Rs.45,40,583.27 (Rupees forty five lakh forty thousand five hundred eight three and paise thirty seven only) as mentioned in Ex.R-1?
6. Whether the claimant is entitled for the refund of the security deposit of Rs.25,00,000/- (Rupees twenty five lakh only) with interest?
7. Whether the claimant is entitled to the amount claimed under various heads as mentioned in Ex.C-11?
8. Whether the claimant is entitled for the cost of the legal notice and for the legal proceedings before High Court?
9. Whether the claimant is entitled for damages of Rs.5,00,000/- (Rupees Five lakh only) for breach of agreement?
10. Whether the claimant is entitled for interest on any of the arrears amounts specified in issues 1, 6 & 7?
11. To what relief the parties are entitled to?'
5. The learned Arbitrator held that the petitioner was entitled to various reliefs in relation to the rent, staff salary, reimbursement of TDS, DVAT, legal expenses and costs of the arbitration. The respondent was held to be entitled to the return of the security deposit of Rs.25,00,000/- with interest at the rate of 10% from 1.4.2011 to 31.3.2013 and 18% from the date of award till remittance. The Learned Arbitrator permitted the petitioner to take credit for an amount of Rs.5,00,000/- representating the sale of the materials that were lying in the warehouse. Though the entire award, to the extent to which it is adverse to the petitioner has been challenged in this original petition, the thrust of the submissions address the issue of valuation of the stock at the warehouse. In any event, the claims per se related to various heads of expenditure and have been adjudicated upon by the learned Arbitrator after hearing the parties and appreciating the evidence in that regard. No material is produced before me so as to bring the challenge within the limited contours of the grounds under section 34 (2) of the Act.
6. With regard to the aspect of valuation of materials, reliance was placed by the petitioner on the stock statements as on 31.12.2011 that http://www.juadcisc.noic.rinding to the petitioner valued the material at a figure of Rs.45,40,583.37/-. The basis of this valuation was the value adopted by the respondent, in an application filed under Section 9 of the Act before this High Court, praying for a direction to the petitioner to furnish security for an amount of Rs.28,89,739/-. A statement of stock summary for the period 1.4.2011 to 30.12.2011 had been filed in the section 9 application which reflected stock of a sum of Rs.45,40,583.37/- and the petitioner proceeded to adopt the same valuation in the proceedings for arbitration. Incidentally, the Section 9 application had been ordered on 8.3.2012 in the absence of the petitioner and the petitioner direct to furnish security which order was never complied with by it. The learned Arbitrator considers the submissions, concluding that the stock statements do not take into account disposal of goods for the period 01.04.2011 to 31.12.2011. He also categorically observes that no other material excepting the aforesaid stock statement was furnished by the petitioner to establish the valuation adopted.
7. The petitioner also, in the course of arbitration, requested that its sales executive stationed at Delhi be directed to take delivery of the stocks and dispose them, so that the resultant consideration be adjusted towards the dues but no concrete proposal was submitted by the petitioner in this regard. Be that as it may, an interim application under Section 17 of the Act was filed by the respondent seeking a direction for sale of goods on 'as is where is' basis. Though the petitioner agreed with the proposal, expressed no objection to the sale of the stock by a separate agency and the appropriation of the sale http://www.judis.nic.in consideration by the respondent, to a suggestion by the Arbitrator that the petitioner take the initiative to ascertain the proper value of the goods prior to sale thereof, the petitioner expressed its inability to do so, citing costs. Ultimately and in the light of there being total non-cooperation on the part of the petitioner in the valuation or disposal of the materials, the goods were sold after tenders were called for, for a sum of Rs.5.00 lakhs. The call for tenders as well as the amount received from the sale is duly substantiated by evidence in the form of an advertisement released as well as a copy of the sale consideration received by cheque. In is on this basis that the learned Arbitrator has proceeded to award credit of a sum of Rs.5.00 lakhs as against the valuation claimed by the petitioner of a sum of Rs.45,40,583.37/-.
8. Learned Arbitrator has considered the claims in detail, awarding the same in part. No grounds have been made out to bring the present challenge within the scope of Section 34 of the Act, limited as it is. On the question of valuation, the learned Arbitrator returns as a fact the position that the petitioner had utterly failed to produce proof to establish its valuation of the stock in the warehouse. He notes that the petitioner had maintained a studied silence between 01.10.2011 and 2014 without any move to resolve the disputes between the parties, till the filing of the Original Petition by the respondent for appointment of Arbitrator. Adverse inference is, rightly, drawn on this account by the learned Arbitrator as it is indicative of the non-co- operative attitude of the petitioner over the years leading to deterioration of the stocks and value thereof and delay in its disposal. It was at the request of http://www.judis.nic.in the respondent that the value of the stocks was determined on a real and fair basis since the sale was pursuant to a tender. The valuation of an amount of Rs.45,40,583.37/- adopted by the petitioner was held, in the above circumstances to be exaggerated and baseless.
9. Having heard the rival submissions of the learned counsel and perused the papers carefully, I agree with the conclusion in the award. Though the award in entirety is the subject of challenge, only the issue of valuation of the stock in the warehouse was contested seriously before me. As far as the remaining issues are concerned, in any event, they relate entirely to factual matters and no perversity is shown in regard to the conclusion arrived at by the learned Arbitrator.
10. On the question of valuation, the award takes into consideration the entire factual matrix of the matter in extenso. The relevant documents as well as all other material have been duly considered and taken into account. The amount of Rs.5.00 lakhs for which credit is given as sale consideration represents the actual value of the goods in the warehouse as on the date of sale thereof. There is no dispute that that the goods have been sold after tenders were called for and the amount is duly evidenced by the cheque received upon sale of goods. No allegation is made regarding undervaluation or irregularity of procedure adopted. I thus agree with the conclusions in the award and no case is made out for interference.
http://www.judis.nic.in
11. The Original Petition stands dismissed. No costs.
14.11.2017 sl/msv Index: Yes/No Speaking order/non-speaking order http://www.judis.nic.in
Dr.ANITA SUMANTH,J.
sl/msv Pre-Delivery order in
O.P.No.334 of 2016
14.11.2017
http://www.judis.nic.in